Alibaba To Invest In Ele.me
Alibaba and its financial arm will invest $1.25 billion in the Chinese food delivery app, Ele.me.
Since late last year, Alibaba Group Holding is exploring opportunities to improve its presence in the Online to Offline (O2O) market. It is believed that the O2O market at this moment is one of the most growing and active markets in the e-commerce sector. Hence for that the company made a few deals and acquisitions to help it take an early lead. Previously it was reported that Alibaba is interested in investing in a food delivery start up known as Ele.me. The Wall Street Journal was told about the deal by sources familiar to the matter.
Alibaba Group and its financial arm, Ant Financial, will be placing joint investment or bet of $1.25 billion of the Chinese food delivery start up app, Ele.me. This deal would allow the company to bolster its presence and offline services to the Chinese online shoppers who are busy in buying, selling, and availing services through smartphones. The Wall Street Journal adds that the Chinese tech giant signed a deal with the food delivery app which will see its online food service platform to cooperate with Ele.me
In short, Alibaba is willing to back Ele.me and this moves come after the firm decided to sell its stake in Meituan Dianping in a deal. Meituan Dianping was the largest online provider of movie ticketing, restaurant booking, and other on demand services in China. Ele.me directly competes with Meituan Dianping as well as Nuomi platform which is owned and operated by Chinese search giant Baidu Inc.
Alibaba announced that it would invest a massive $900 million in the food delivery app whereas Ant Financial would further chip in another $350 million in Ele.me. The investment negotiations were confirmed by the spokeswoman of Ant Financial. “Are you hungry?” is the meaning of the Chinese name of Ele.me.
A cooperation agreement was signed between both parties under which Koubei, Alibaba’s online food services platform, will cooperate with Ele.me. Koubei in Chinese means “word of mouth reputation”. Last year, Alibaba and its affiliate announced to invest three billion Yuan each ($462 million) in its online food services platform.
More and more Chinese internet companies are willing to increase their shares for smartphone applications in a fierce and tough competitive market. The apps connect the online shoppers with brick and mortar, and traditional stores to avail services such as food deliveries, movie ticketing, restaurant booking, and taxi rides.